SALINA JOURNAL: Goossen: State economy can’t go on like this

Harold CampbellOctober 3, 2016

A course correction is needed for the state’s finances if Kansas is to get out of its worsening economic situation, Duane Goossen, former state budget director, said Monday in a talk at the Bicentennial Center.

“We’re living right on the edge,” Goossen told the Salina Rotary Club at its regular Monday meeting. “Kansas is just scraping by. As money comes in, we pay what we can pay.”

Goossen said for fiscal year 2016, which ended June 30, the state had $72 million in general fund reserves, revenue including transfers from other funds totaling $6.145 billion and expenditures of $6.203 billion.

The result is a $58 million deficit.

“The federal government can solve a deficit problem by borrowing money,” he said. “Kansas can’t do that.”

He said the upcoming Legislature would have to rework the 2017 budget, which he called “unworkable.” Preparing the 2018 budget, he added, would be even harder.

He placed the blame for the state’s financial woes on tax cuts and a tax exemption on business income passed in 2012 and deeper tax cuts approved in 2013. Since then, the amount of income tax revenue going into the state general fund has dropped from $2.9 billion in 2013 to $2.2 billion in 2014, 2015 and 2016.

“Kansas has drastically cut income taxes on the premise that it would bring in new jobs, but that hasn’t happened,” he said.

Job growth lagging

Comparing Kansas job growth figures with neighboring states and the national average, he said Kansas is lagging behind.

“It’s like going down the interstate at 40 mph,” he said. “You’re going forward, but other cars are whizzing around yours.”

In Goossen’s estimation, the future looks even more bleak.

“All the political energy in Topeka is going to figure out how do we survive,” he said. “Everyone is focused on pulling back.”

Even if the state returned to its pre-2013 finance system, he estimated it would take a year and a half to two years before revenue would return to normal.

“Revenue needs to be increased just to balance this thing,” he said. “It’s going to take a lot of work before that occurs.”

In an interview after his talk, he said while it was likely Democrats and moderate Republicans would dominate the next Legislature, he had no idea what Gov. Sam Brownback would do.

“He’s made no indication he’ll change course,” Goossen said.

However, he said he thought most Kansans believe something must be done to improve the state’s financial outlook.

“I believe most Kansans believe things have gone well off track,” he said.